Small Business Health Insurance Plan Types
A toxic mix of rising premiums and revenue shortfalls are making some of the firms who do carry small business health insurance plans consider dropping their health insurance. Dropping health insurance has been a trend for the past decade. Studies have shown that the age of a small business influences whether or not it offers and maintains health insurance.
Individual states have terms and condition for who qualifies as a small employer based on the number of eligible employees. State law may require that coverage be offered to any full-time employee, their husband or wife and their dependents. Some plan carriers may require that at least 75 percent of eligible employees elect for membership as a condition of offering a plan.
Indemnity and Managed Care as Primary Options
Indemnity or managed care are the two basic types of coverage a business owners select. The selection could either type, or a hybrid plan offering features of both. Indemnity insurance offers more choice but is more expensive. Both types have their pros and cons.
Indemnity plans used to be the only choice in health insurance. This type of plan covers any provider the user selects if the care is medically necessary and consistent with the policy. This coverage comes at a greater cost than a managed health care plan.
The managed plan is administered either by insurers or by health maintenance organizations (HMOs) that are a network of providers. The rules governing HMOs can be extensive and complex. The strictest example permits only HMO use, with exceptions in rare circumstances. Less strict types allow access to services outside the network. A condition for using such a plan is the requirement for choosing a primary care physician or PCP. The PCP regulates health service and networks with other providers. Approval by this primary care physician is needed for non-routine services and specialist consultation.
PPO or POS Plans are Managed Care Options
Insurance companies offer the Preferred Provider Option or PPO type of managed care plans. HMOs offer Point of Service Option or POS plans. Pre-approval of services from a primary doctor is not required under these plans. Their link to a managed care network allows the insured to opt for cheaper managed care. Not surprisingly, POS plans tend to be cheaper.
Health Saving Accounts and the Self Funded Plans
Less common are the small business health insurance plan types of Health Saving Accounts and self funded plans. Health Savings Accounts were introduced in 2003 to reduce health costs. They are part of the trend towards consumer driven health care. Employers who have ample capital can choose to self-fund the insurance they offer. Employers generally contract with third-party administrators to administer their health plans.